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Trend Trading vs Countertrend trading

There are two theories of picking the best stock in the market. The first strategy is called trading with the trend and the second strategy is called trading agains the trend.

They both make a lot of sense on one end if a stock has fallen so much in a short amount of time it is bound to rebound eventually, especially if it is a strong stock. If you look at it from another perspective however, if a stock just keeps going up it is more likely that it will continue its trend then suddendly start dropping?

But which method works best in reality? What is the best approach if you are actually trading. Well, while some people may get lucky bottom picking it tends not to be the best approach most of the time. One of the stock tips that any successful trader will give you is to trade with the trend.

One very powerful strategy for picking stocks, momentum investing focuses purely on where the stock is heading. Instead of trying to find the exact top and bottom of a stock a momentum investor will attempt to find stocks that are already trending up and simply buy and hold them until they break their trend.

This can be a very powerful strategy and has made many people very wealthy throughout the years. It continues to be a very profitable way of investing and can actually help investors to make money when stocks go up and when they go down.

You don’t have to be a momentum investor to take advantage of a stocks trend. If you want to learn stock trading then you are going to have to learn that it is extremely important to trade with the trend. After all why not work on putting all of the odds in your favor?